Iron ore spot prices staged a remarkable rally on Tuesday, following an equally enormous surge in Chinese futures.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by $2.68, or 4.52%, to $61.96 a tonne.
It was the largest one-day gain since August 1, and left the price at highs not seen since August 16. As a result of the surge, its year to date gain swelled to 42.2%.
Like the benchmark price, both lower and higher grade ore ripped higher, particularly the latter.
Metal Bulletin, like others, put the gain in iron ore prices down to renewed strength in Chinese steel markets.
“The steel market has also performed strongly,” the group said. “China’s spot rebar prices rose today after holding steady for several days with surging futures providing support to the market.”
That, it says, flowed through to other bulk commodity prices, including iron ore.
“Coking coal and coke futures surged during the day, which led to other ferrous futures following suit,” it said.
Suggesting that the gains of Tuesday will extend further today, Chinese futures continued to push higher in overnight trade.
The January 2017 iron ore future on the Dalian Commodities Exchange last traded at 467 yuan, up 0.65% for the session. Coking coal futures continued to surge, jumping by a further 3.51% to 1,694 yuan.
The one exception to the rule was rebar futures traded on the Shanghai Futures Exchange which slid 0.82% to 2,526 yuan.
Given steel prices led gains in other bulk commodities yesterday, many will be watching its movements when trade gets back under way at midday AEDT.